At October 1, Arcade Fire Enterprises reported stockholders' equity of $70,000. During October, common stock of $4,000 was issued and the company earned net income of $14,000. If stockholders' equity at October 31 totals $80,000, what amount of dividends were paid during the month?
A) $0
B) $4,000
C) $8,000
D) $10,000

Question

Quizplus · Accepted Answer

The change in stockholders' equity during the month can be calculated as follows:

Beginning stockholders' equity + Issued common stock + Net income - Dividends paid = Ending stockholders' equity

$70,000 + $4,000 + $14,000 - Dividends paid = $80,000

Solving for dividends paid:

Dividends paid = Beginning stockholders' equity + Issued common stock + Net income - Ending stockholders' equity

Dividends paid = $70,000 + $4,000 + $14,000 - $80,000

Dividends paid = $8,000

Therefore, the amount of dividends paid during the month was $8,000.

At October 1, Arcade Fire Enterprises Reported Stockholders' Equity of $70,000